Green Machines : Fact Sheets : Tax Incentive Study Findings

THE FACILITY CONVERSION TAX INCENTIVE STUDY

A new study, "Fuel Saving Technologies and Facility Conversion: Costs, Benefits, and Incentives," was prepared by the University of Michigan Office for Study of Automotive Transportation (OSAT), the Michigan Manufacturing Technology Center for the National Commission on Energy Policy and Michigan Environmental Council. The study was released as a technical appendix to the larger National Commission on Energy Policy report, "Ending the Energy Stalemate: A Bipartisan Strategy to Meet America's Energy Challenges."

SUMMARY OF STUDY FINDINGS

A manufacturer tax credit could help to position the US-based auto industry to gain share in hybrid and advanced diesel vehicle markets in a rapidly growing segment

Without such an incentive, a majority of hybrid and advanced diesel (H & AD) vehicles will likely be imported, resulting in up to 200,000 lost jobs and $2.8 billion per year in lost federal tax revenues (depending on market scenarios)

Job and tax losses would be concentrated in the Midwest, primarily Michigan, Ohio and Indiana

An investment tax credit for the production of H & AD components made in existing U.S. facilities (covering 67% of tooling and equipment costs) could help to preserve up to 25% of projected job and economic losses, by inducing both component and vehicle production here in the U.S.

The cost of such a credit could be as high as $1.1 billion over 5 years, but result in tax gains of greater than $8 billion over a 10-year period

The policy would help to save up to 117,000 barrels of oil per day

Additional investment credits for the assembly of H and AD vehicles could provide further tax and job benefits, and deserves further study

While not the subject of the study, similar tax policies could also be implemented in key automotive production states, further helping to reduce job and tax revenue losses in those states.

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THE FACILITY CONVERSION TAX INCENTIVE STUDY A new study, "Fuel Saving Technologies and Facility Conversion: Costs, Benefits, and Incentives," was prepared by the University of Michigan Office for Study of Automotive Transportation (OSAT), the Michigan Manufacturing Technology Center for the National Commission on Energy Policy and Michigan Environmental Council. The study was released as a technical appendix to the larger National Commission on Energy Policy report, "Ending the Energy Stalemate: A Bipartisan Strategy to Meet America's Energy Challenges."
SUMMARY OF STUDY FINDINGS
A manufacturer tax credit could help to position the US-based auto industry to gain share in hybrid and advanced diesel vehicle markets in a rapidly growing segment Without such an incentive, a majority of hybrid and advanced diesel (H & AD) vehicles will likely be imported, resulting in up to 200,000 lost jobs and $2.8 billion per year in lost federal tax revenues (depending on market scenarios) Job and tax losses would be concentrated in the Midwest, primarily Michigan, Ohio and Indiana An investment tax credit for the production of H & AD components made in existing U.S. facilities (covering 67% of tooling and equipment costs) could help to preserve up to 25% of projected job and economic losses, by inducing both component and vehicle production here in the U.S. The cost of such a credit could be as high as $1.1 billion over 5 years, but result in tax gains of greater than $8 billion over a 10-year period The policy would help to save up to 117,000 barrels of oil per day Additional investment credits for the assembly of H and AD vehicles could provide further tax and job benefits, and deserves further study While not the subject of the study, similar tax policies could also be implemented in key automotive production states, further helping to reduce job and tax revenue losses in those states.
Dowload the full study Download this information for printing as a PDF